Adidas, Who Will Run Faster And Win?

The competition in sports apparel industry is becoming more and more intense. Adidas seems to be ready to run faster at the age of 70.

In the development plan of Adidas, every 5 years is a node. After launching the strategy of "2015 way" in 2010, the group set up a brand new strategic plan in 2015, aiming to become the best sports brand in 2020. This also means that it will continue to exert pressure on the top competitor Nike.

The plan starts with the five driving areas of soccer, running, women, children and sports classics, and strengthens key products and brand influence by improving supply chains, expanding major markets and accelerating the layout of online businesses.

With the 5 year's "new strategy" coming to an end, Adidas also accelerated the pace of innovation and made the final spurt.

According to fashion headline monitoring, the German sportswear giant has had new initiatives every month this year, especially in the Chinese market.

In January 19th, Adidas entered the world's largest start-up Station F.

In February 19th, Adidas launched the new UltraBOOST 19 color matching in Tmall.

In March 13th, driven by double-digit growth in the Chinese market, Adidas achieved a record high last year.

Adidas Asia Pacific headquarters opened in Shanghai in March 27th.

In April 4th, Adidas signed a cooperation agreement with singer Beyonce.

Putting the "heart" of the Asia Pacific region in the Chinese market

Adidas first entered the Chinese market in 1997, 17 years later than Nike, but this did not hinder Adidas's ambition.

Like other competitors, Adidas began targeting the Asia Pacific market with great potential in the beginning of 2019. After the first Asian Pacific brand center opened last year in the first commercial department of Shanghai, which is the opposite of Nike 001 global flagship store, Adidas Asia Pacific and greater China headquarters Homecourt was officially completed in March 27th in Shanghai.

This is only a short span from the brand's integration of the four major growth areas in the Greater China, Japan, Korea, Southeast Asia and the Pacific region into a unified Asia Pacific market.

On the day of the unveiling, Adidas CEO Kasper Rorsted joined the Asia Pacific region's managing director Gao Jiali Colin Currie to join hands with the brand ambassador David Beckham to attend and cut the ribbon. This shows that the brand's attention to the Chinese market has risen to a higher level.

At the unveiling ceremony of Homecourt, Kasper Rorsted and Colin Currie fully interpreted the strategic significance and status of the new headquarters.

Kasper Rorsted said that in the past 2018, branding in China was brilliant, and the Asia Pacific region is also one of the largest and fastest growing markets in the world. The new headquarters in Shanghai is designed to achieve new breakthroughs through Shanghai's radiation to the Asia Pacific region.

Colin Currie emphasized that over the past 3 years, adidas has always implemented the three core of the "new strategy": speed, key cities and resource opening. It has been implemented in various aspects of brand operation. The opening of the new headquarters is the new start of the group's efforts to build the Asia Pacific market. "This year is Adidas's 70 year birthday, which is a good time."

Analysts point out that Shanghai is one of the six major cities in the world with Adidas concentrating resources and giving priority to sustainable investment. The New Asia Pacific and greater China headquarters Homecourt is located here, reflecting the continued implementation of Adidas's strategy of "setting up the new".

In the future, Shanghai will play a more important role in the business development of the brand Asia Pacific region, thus promoting the development of other markets in the Asia Pacific market.

In an interview with fashion headline, Colin Currie said that after the new headquarters of the Asia Pacific region was put into operation, the primary task of Adidas is to unify the product service and communication standards of every market, so as to further optimize the service and achieve higher efficiency by merging several potential markets in the Asia Pacific Region.

Next is to grasp Chinese consumers from more dimensions.

Colin Currie reveals that today's consumers are not only spending at home, but also looking for special products in Adidas stores when traveling abroad. With the establishment of the new headquarters in the Asia Pacific region, barriers between several markets will be opened up, and stores in different parts of the world can provide more personalized services to Chinese consumers in accordance with the information in the database.

According to Adidas's latest earnings report, the brand Greater China region sales increased 23% in 2018, and it has become the third largest market in the world. Although the growth rate slowed down significantly in the fourth quarter, the growth rate slowed down significantly in the fourth quarter. However, as of the third quarter, Adidas grew faster than 20% in the Greater China region for 11 consecutive quarters.

At the same time, Nike also continued to curb Adidas in the market, and its revenues in the third quarter of February 28th rose 24% to 1 billion 588 million dollars, or 10 billion 600 million yuan.

Thanks to the push from the Chinese market, Adidas Asia Pacific sales also recorded an increase of 14.9% to 7 billion 141 million euros last year.

During the whole year of 2018, adidas Group's sales volume after excluding the exchange rate increased 8% to 21 billion 900 million euros, and net profit rose 19.5% to 1 billion 700 million euros, a record high.

Under the guidance of the "new strategy", adidas has now entered the more than 1200 high and low level cities in China. Last year, it added 1000 new stores, bringing the total number of stores to 12000. This year, it will continue to open 1000, and accelerate the pformation of digitalization at the same time.

It is noteworthy that the establishment of the new Homecourt is not only a consideration of product, efficiency and cost, but Kasper Rorsted emphasized in the interview after the ceremony that in order to achieve long-term sustainable development, the group's work environment and enterprise culture are also very important. What is more meaningful is that Nike, Under Armour and other brands have been exposed to corporate culture problems such as discrimination against women in recent years.

The new Homecourt is located at the ITC two phase of the China World Trade Center center in Xujiahui, Shanghai. It has an office area of about 30 thousand square meters, with a total of 21 floors. This is the first time that Adidas has been built as a company headquarters in China for the first time.

The new Homecourt is built around the four key elements of digitalization, cooperation, health and innovation, aiming to fully enhance the efficiency of staff work, realize the close and efficient cooperation among units, and fulfill the commitment and pursuit of employees to create the best working environment.

In order to make the collaboration and communication between different regions and departments more flexible, the office area is mostly open design, and the conference rooms and function rooms are also separated by glass.

The 15, 16, 17, 18 and 21 floors of the building are known as the "My Arena" working area. The decoration design is consistent with the German headquarters building. 21 of them have coffee bar and dining bar for employees to rest and replenish energy, while the 3 floor is a gymnasium with an area of 800 square meters.

Full digital is also a highlight of the new Homecourt. For this reason, the group has configured iPhone as a company's mobile phone for all Chinese employees. The first floor lobby staff can brush their faces, and the floors need to shake their cell phones.

In addition, from the news to the booking room or even the gym, the staff can complete it by mobile phone.

It is reported that the comprehensive digital system will also be put into use in Adidas headquarters in Germany and the US division.

Colin Currie points out that with the use of Homecourt, there will be about 1500 employees coming from 28 different countries and regions in the world. Adidas will promote the Asia Pacific market integration and sustainable business models more efficiently, improve operational efficiency, streamline the flow, and give full play to the advantages of regional markets in talent, experience and resources, so as to compete for more shares in the fierce market competition.

"Burst funds" should also be diversified.

Less than half a month before the new headquarters of the Asia Pacific region was established, Adidas recently joined the American singer Beyonce Beyonc to find the topic list.

Adidas cooperation with non sports stars is not uncommon. There have been successful cases such as Kanye West and Rita Ora, but its joint efforts with Beyonce still cause great concern in the industry.

Adidas said in a statement that the two sides will jointly restart the Beyonce personal brand Ivy Park, in addition to clothing and accessories, and other products, will also launch the first shoe series Ivy Park, Beyonce continues to have the right to operate independently of the brand.

At the same time, the brand and Beyonce will conduct deeper cooperation, including encouraging and empowering the next generation of creators, promoting global positive changes through sports, and exploring new business opportunities.

Beyonce pointed out that, with the support of Adidas resources, the brand will accelerate the expansion of globalization.

Last November, Beyonce decided to buy the remaining 50% of Ivy Park from British fast fashion Topshop, after her management company, Parkwood, had a 50% stake in the Ivy Park brand.

The name of Ivy Park is derived from the name "Blue Ivy" of Beyonce and her husband's Jay Z daughter. Although the brand was established in 2014, the first series was officially launched in the market in 2016. The product design is mainly based on street sports style, aiming to convey to women the brand concept that women can also be very strong.

At present, adidas has not disclosed more details about cooperation with Beyonce. Since Ivy Park has been selling on Topshop, JD Sports and Selfridges channels, Adidas's joint efforts with Beyonce may not repeat the early hunger marketing route of Yeezy, but is more populace and pro citizen, and intends to occupy the market in a large scale.

Some analysts believe that the new agreement reached by Adidas and Beyonce is not only designed to extend to the new product area through Ivy Park, but also cleverly responds to the brand new strategic focus put forward by the brand this year, that is, to increase investment in women's sports and leisure market.

Another industry speculate that Adidas may be interested in building Ivy Park into "second Yeezy" and launching more explosions to stimulate performance and achieve new growth.

Like the Kanye West of Yeezy, Beyonce and his wife have a very high exposure in social media. The number of fans of Beyonce in Instagram is as high as 126 million, which is a huge traffic pool for Adidas.

Between 2011 and 2015, Adidas's share in the footwear market in the United States went from bad to worse. Until 2014, when it signed a contract with hip-hop star Kanye West for $10 million and regurgated with classic retro white shoes such as Yeezy series and Stan Smith, Adidas came back in the United States and doubled at the end of 2017, successfully surpassing Air Jordan of Nike.

Although adidas has never disclosed the specific performance data of the Yeezy Series in the earnings report, Kanye West has revealed last year that its Yeezy brand valuation has reached US $1 billion 500 million.

NPD analyst Matt Powell expects the Yeezy Series sales to grow by 600% in the fourth quarter of 2018.

But when Yeezy Boots suddenly announced its output in August last year, it did not receive positive market feedback.

Analysis shows that as the product enters the mass production stage, the interest of consumers is declining. The average selling price of series products on KLEKT and other resale platforms is declining.

Surprisingly, Kasper Rorsted chose to continue to believe in Kanye West, but it would also make adjustments to its business model while increasing investment.

Three years ago, Yeezy released at most two to three new products a year, and the number was very limited. But in response to the Kanye West's desire to popularized Yeezy brand, Adidas will launch 20 to 30 Yeezy products every year, and insert some limited styles in it.

The increase in production also means that the series is going from the hunger marketing stage to the scale income stage. After gaining high attention and brand value through the Yeezy series, the group will begin to make money with this series.

"What we need to do now is to ensure that we can continue to bring the truly popular shoe products into the market, thereby achieving growth in performance. Yeezy is not a US brand, but a global brand."

Kasper Rorsted added.

Obviously, Adidas is aware of the risk of surviving on a single explosive product. Fashion headlines reported earlier that the development curve of every Adidas exploded product seemed to have the same goal.

With the help of hunger marketing strategy, Adidas revived Stan Smith and Superstar two classic sneakers, but over time, the two shoes that helped Adidas turn over were also no longer hot. Behind this, young consumers were getting more and more happy.

At the moment of Stan Smith, Ultraboost and Yeezy Boots craze, the Kasper Rorsted said Adidas will continue to develop new explosions, such as retro sneakers like "old shoes" shoes, and Adidas sports shoes launched in January this year with reality show star Kylie, also attracted interest from at least 130 million fans.

Kasper Rorsted stressed to fashion headlines that sport has always been the most important and core business of Adidas, accounting for about 2/3 of revenue and 1/3 of leisure products. Therefore, Adidas's positioning is still a professional sports brand. Football, running and rugby will be the focus of this year's development.

It is noteworthy that Nike CEO Mark Parker said earlier that at the earnings conference earlier this year, more sneakers with a price below US $100 will be introduced this year to attract more consumers, while improving the competitiveness of products at all price levels of Nike. We will implement cost-effective plans in the world and incorporate more innovative designs into parity products.

According to market research firm NPD Group, the sports shoes Market under 100 dollars is very large. The most popular sports shoes in the USA in 2017 and 2018 are not classic series such as Air Jordan and Air Max, but Nike Nike priced at $65. Obviously, this is an unprecedented price adjustment for Adidas.

Who runs fast and who wins?

Adidas can not have failed to realize that after entering the 2019, the track of sports apparel industry is getting more and more crowded.

Whether in professional sports or fashion trends, Nike, Under Armour, Puma and even Lining and Anta in China are trying to win more young consumers' attention in a variety of innovative ways.

After Adidas announced the signing of Beyonce, Nike also issued a statement saying it had appointed WTA global champion Osaka Naomi as spokesperson. The former sponsor of the star was Adidas.

Puma, also resurrected by Rihanna's star effect, signed a 90's singer Selena Gomez at the end of last year, and also worked with the beauty brand M.A.C for cross-border cooperation.

In March of this year, Under Armour announced that Nike former chief executive was chief design officer.

In this regard, Colin Currie believes that good competition in any industry is beneficial to consumers. "Adidas will face local competitors in any market, and we can always learn new experiences from them."

In the eyes of Adidas, it is a key link to truly achieve digitalization if we want to stand out from many competitors and run fast.

Kasper Rorsted admits, "today's young consumers will first contact and understand the products of Adidas through digital social media channels, especially in China, and to keep close to young consumers, we need to find the appropriate communication platform and launch different products for different subgroups. Not all products can attract all consumers. The average age of adidas employees is 29 years old."

In the Chinese market, adidas has followed this principle to match young people. It is not only the first international sports brand endorsed by Chinese local celebrities such as Angelababy and Yang Mi, but also a series of theme products inspired by Chinese characteristics and culture.

At the end of last year, Adidas reached a strategic cooperation with Tmall platform of China's e-commerce giant Alibaba, and launched a new UltraBOOST 19 color match in Tmall in the world in February 19th.

At present, the number of fans of Adidas in Tmall flagship store is 20 million 640 thousand, which has exceeded 18 million 800 thousand of Nike.

In addition, adidas has also worked with Tencent, and has Adidas official website in China.

According to Kasper Rorsted, the sales of Adidas's own business in 2020 will reach 4 billion euros, and online sales in 2018 will exceed 50%.

In Adidas's view, China is not only a global entity in the era of digitization and big data, but also has different consumer demand among different cities. Therefore, the group will continue to better understand and see consumers in different regions through WeChat, micro-blog and other local social media platforms.

To this end, adidas has set up a digital center in the new headquarters of the Asia Pacific region. Through the core brand official website, combining the data of Tmall and Tencent platform, we can establish a digital ecosystem. In the future, as long as consumers enter the offline stores, Adidas can get relevant information through face recognition, such as buying history and product preferences, and so on, helping salesmen provide targeted services.

The cooperation between Adidas and Alibaba is far more than that of product launch and sale. Kasper Rorsted said that the cooperation with Alibaba is from the technical level, and the key point is to return to professional sports. The brand will cover the next generation of sports enthusiasts through Ali sports, so as to foster greater market and business opportunities.

Adidas focuses not only on the digitalization of the consumer side, but also on the digitalization of the design side. Under the continuous development of new and high technology, the new shoe shoe drawings can be produced synchronously in the global supply chain from Europe, so as to achieve a unified global listing.

James Carnes, vice president of Adidas global brand strategy, said the group has started mass production of Alphaedge 4D, which is also the first sport shoe in the world to use 3D printing technology as well as mass production. "The new 3D technology allows Adidas to manufacture products locally and shorten pportation time, and at the same time, reduce costs greatly, because we do not need to produce a complete set of molds."

The brand is expected to produce about 1 million pairs of Alphaedge 4D in 2019.

Another new technology is related to the most sustainable development of the moment, that is, the "Parley" series of Adidas, which is mainly made of marine floating plastic waste, including shoes, T-Shirts, swimsuits and other products.

It is reported that Parley series shoes last year sold a total of 5 million pairs, this year the number will double to 11 million pairs.

In January this year, Adidas officially entered the world's largest start-up Station F, launched the incubator Platform A, and chose 13 start-ups in three fields to participate in the plan, with an estimated investment of 1 million euros.

In addition to helping start-ups choose to build traction, Adidas also hopes to learn from it and get more new ideas for strengthening its own sales and supply chain.

There is no doubt that Adidas has returned to the market rationality from the earlier competition of fresh consumers, and has officially shifted to a new chapter in the second half of the product strength and core strategy.

The fundamental meaning of sportswear group should be linked to professionalism, and products and services will never change in the face of changing trends and consumers.

Author: Zhou Huining